How Welfare Offices Undermine Welfare Reform

Welfare and related policy reforms adopted by Congress in the 1990s seemed to strike an implicit bargain with low-wage working families. Parents were expected to meet their "personal responsibility" for supporting themselves and their children by leaving welfare and going to work. If they did, government would help out by providing a package of income, health insurance, and child care assistance to "make work pay," even for low earners. Four years out, there is disquieting evidence that government is not keeping its side of the bargain--largely because we have failed to develop the appropriate administrative systems and capacity to deliver assistance to the working poor. This ostensibly bureaucratic failure happens to serve the goal of many elected officials to avoid spending money on the poor. But if our commitment to "end welfare as we know it" without impoverishing families is genuine, these administrative problems must be addressed.

To understand why low-income working families are failing to get or keep the supportive assistance that was designed to help them achieve self-sufficiency, one needs to look beyond legislated policies to examine the details of program delivery. This is work that several colleagues and I are pursuing in our research on child care and welfare reform at the state and local levels--talking to program managers and staff, studying program operations, and observing the experience of program applicants and clients as they negotiate the system. What we have observed is disturbing: The state and local welfare systems that distribute support services to poor individuals remain ill-equipped to serve a new population of working poor families.

Let me say up front that I am a sympathetic observer of welfare programs. I have worked in, managed, and studied these programs for many years. I believe them to be staffed by diligent individuals who want to do a good job. I have also observed widespread support, at the agency and staff levels, for efforts to move welfare toward a system that rewards and supports work.

What I have not seen is a reformulation of the systems, administrative structures, and incentives to allow welfare offices to do a good job in keeping the government side of the welfare reform bargain.

One can glean particularly revealing insights by considering the organization of several kinds of help for low-income individuals: help accessing the system, help understanding what benefits are available, help finding the services they need, and help keeping the benefits for which they are eligible.

Getting the word out. The first form of help that low-income individuals need is information. Learning about the benefits for which they may be eligible turns out to be a surprisingly difficult hurdle for many. Although low-income individuals are often portrayed as knowledgeable and savvy consumers of welfare services, more systematic research reveals that their information is often both limited and inaccurate.

Child care may be one of the most important, but least well-known, benefits available to low-income parents. In a 1995 survey of current and former welfare recipients in California, for example, my colleagues and I found that two-thirds to three-quarters of mothers did not know about employment-related child care subsidies. More recent studies in Florida, Massachusetts, and South Carolina reveal that, even in the wake of welfare reforms, 40 to 60 percent of former welfare recipients remain unaware of child care assistance for which they may be eligible. Given that recipients exiting the welfare system have been the primary target of new child care subsidy programs, knowledge is likely to be even lower among low-earning families who have had little contact with the welfare system.

Similarly, a recent study of food stamp participation found that 60 percent of families who were poor enough, but not receiving food stamps, had never applied for assistance because they did not know they were eligible. Notably, only 13 percent indicated that they failed to apply because they didn't need help.

Though local welfare offices now routinely call their clients "customers," they have had little practice drumming up business. Welfare program operations are designed, first and foremost, to sort applicants into two groups, those who are eligible for benefits and those who are not, and then to serve the subset determined eligible. Until the recent decline in welfare case loads, the demand for assistance exceeded staff and other organizational resources. (Many programs still face the same constraints because they have been downsized as case loads have dropped.) Given that their workload increases directly with the number of applicants they must process and serve, welfare administrators and staff have had little reason to beat the bushes for more applicants. Indeed, given the persistent and growing public pressure to reduce case loads, they have had distinct disincentives to seek out additional customers.

(It is noteworthy that staff and administrators in these programs usually define their work as starting once an individual arrives at the office to apply for benefits. One of the most revealing questions I ask local welfare administrators is, what share of the area's poor population do they serve?--a question that few have been able to answer because the "customers" they collect data on are welfare recipients rather than poor people.)

So it should not be surprising to learn that welfare programs have done little or no outreach to advertise welfare benefits, and that this pattern has carried over to the provision of nonwelfare support services. Local welfare administrators and staff tell us they assume that low-income families "already know" about child care benefits through informal information channels, or that they have been given the information by another agency--one that specializes in employment support or child care.

Yet outreach efforts of other public agencies are also minimal. Staff at many community-level child care agencies, for example, think outreach is unnecessary because funds are limited and families are already on waiting lists. Other staff are afraid that active outreach will create a demand for services that cannot be met. The result, as the survey data suggest, is that many families who may be eligible for assistance never hear about it or receive inaccurate information through informal channels.

Helping individuals access the system. Unfortunately, those who know enough to seek benefits may face even more formidable hurdles when they encounter the welfare office. In some communities, there are now alternative entry points for the working poor to obtain nonwelfare assistance: Individuals may sign up for Medicaid at a local health clinic or for child care benefits through a Child Care Resource and Referral program. But for most individuals, and for any who hope to qualify for food stamps, the point of entry is still the local welfare office. (In fact, many areas still use a single application for all three programs, a by-product of earlier reforms designed to simplify the application process.) Once again, the welfare system turns out to be poorly equipped to help them.

The administrators and staff of welfare programs, like those in any public organization, try to be responsive to the expectations of the public and of elected political officials. Over a period of many years, these administrators and staff perfected procedures for doing what was expected of them: sorting eligible from ineligible applicants, detecting fraudulent claims, and generally discouraging demand for welfare services. As the entry point for supportive assistance to the working poor, welfare programs are now expected to play a more nuanced role--as one local administrator described it, to treat reliance on government for welfare as "bad" but "Medicaid as not so bad" and "child care as good."

Welfare programs are not only poorly equipped for this more nuanced task, but in many communities they are moving in directions that will aggravate the problem. Applying for welfare is, by design, an arduous, time-consuming, and generally unpleasant process. It also exposes individuals to eligibility determination procedures that are more localized, less uniform, and often more arbitrarily applied than those of unstigmatized government programs (such as Social Security). The welfare rights movement of the 1970s forced local welfare systems to operate with greater uniformity and due-process protections for clients. With the welfare reforms of the 1990s, Congress reversed this nascent trend toward uniformity by devolving control over welfare eligibility rules and procedures to the states. In their zeal to reduce welfare case loads and costs, many states have used this new authority to impose more complex eligibility tests for welfare. As a result, in many parts of the country, getting welfare has become even more difficult and unpleasant than it used to be. And the welfare office, with its difficult processes, is the system that many low-income workers have to go through to find out if they are eligible for other forms of assistance.

In one county in the Northeast, for example, welfare applicants must now complete up to six different in-person appointments in order to be approved. These appointments include an intake interview with a welfare examiner, an orientation and assessment at the local Department of Labor, an interview with a child support enforcement official, and--at the discretion of the welfare examiner--a drug and alcohol screening at the Health Department and an office appointment and home visit by a fraud investigator. For each of these required appointments, the applicant is obligated to collect a different set of documents to verify her financial and personal circumstances--typically birth certificates, school records, proof of residence from the landlord, additional proof of residence from a "professional person," wage and bank records, and a written statement from her past employer certifying that she has indeed been terminated. In some circumstances, even more documents may be required--such as car registrations, statements from absent parents about the amount of child support they contribute, divorce papers, and even funeral programs (in cases of recent widowhood).

As the applicant is visiting schools, landlords, neighbors, ex-employers, and others to collect her verification, she may be required to attend job search programs or to document her independent job search activities; she may be enrolled in mandatory drug or alcohol treatment; she may undergo a full investigation by the fraud unit. If she fails to follow through on any of these steps, her application will be "closed" without a formal determination of eligibility.

Not surprisingly, a large number of this county's applications are "closed" before they are completed. (With six mandatory appointments, even if applicants had a 90 percent probability of keeping each appointment and bringing in all the required paperwork, their probability of making it through the entire process would be barely 50 percent.) Because welfare staff do not keep records on this, they know little or nothing about what happens to most applicants who don't make it through the county's rigorous eligibility tests. Most unsuccessful applicants just disappear. Whether they disappear because they find work and decide to forgo benefits, or because they are overwhelmed and discouraged by the process, is anyone's guess. How many were potentially eligible for other, nonwelfare assistance is an even greater mystery.

While the details vary from place to place, the system in this county is not particularly unusual. The elaboration of eligibility processes reflects both federal and state priorities. The federal welfare reforms require states to involve welfare recipients in employment-related activities, and many states have added on other up-front requirements, ranging from drug screening to parenting classes. Most states have also retained or even enhanced their procedures for error and fraud detection. (They have done this with good reason. While the welfare reforms relaxed federal oversight of welfare determinations, the Department of Agriculture still imposes penalties for "quality control" errors in food stamps.)

From the perspective of welfare system administrators, tough fraud detection and aggressive diversion of applicants are among the chief successes of welfare reform precisely because they have contributed to the remarkable decline in case loads. But the largely unnoted consequence is the diversion of low-income individuals from the nonwelfare supportive services they may need to achieve self-sufficiency on low wages. It is difficult to estimate how many are affected because welfare systems rarely track these "noncases." However, a declining food stamps case load and lower than expected participation in new child health and child care programs suggest that the number may be large.

Helping applicants find the right services. Even if an applicant manages to make it into and through the arduous system of welfare application, her chances of getting the right information, referrals, and applications for supportive assistance remain uncertain. The rules governing entry to Medicaid have grown more complex over the years, as policies have changed, new rules have been adopted, and court decisions have codified rights for sometimes very narrowly defined groups. In many states, child care continues to be nearly as complicated, with separate rules for those in welfare, leaving welfare, or outside the welfare system. In order to obtain these benefits, applicants need information, assistance, and often the time and goodwill of the workers who make eligibility determinations. Front-line workers, in turn, need both a detailed knowledge of the system and time to determine claimants' needs and match them to the right services. Unfortunately, many welfare workers have neither--even when they have plenty of goodwill.

Two examples from visits to local welfare offices illustrate how easy it can be for a claimant to narrowly miss out on assistance for which she may be eligible. In one welfare office encounter in a southeastern state, a single mother of two began the multistep process of qualifying for welfare by telling an eligibility screener that she needed help: She was about to be evicted from her home because she was under treatment for depression, out of work, and behind on her mortgage payments. Because the screener was intent on doing her job--which was to sort the applicant into the right sequence of employment preparation activities--she didn't have the time or expertise to address the housing problem. The best she could do was to suggest that the woman let herself be evicted and move to the homeless shelter in order to move up on the priority list for public housing. By the end of the morning, the applicant had been assessed for employment and sent off to job search training, but no one had directed her across the office to the emergency assistance staff.

In another encounter, this time in a southwestern state, a recently unemployed mother came to her meeting with the welfare examiner with what she hoped was the right paperwork to apply for welfare, food stamps, and Medicaid. She met with an experienced but harried welfare worker who was trying to master a new computerized intake system. Over the course of the next two hours, she answered questions about her family (Social Security numbers, places of birth, mothers' maiden names), about her and her husband's employment (prior work, reasons for leaving, self-employment income), and about her car (it had broken down) and other assets (she had none). She was required to sign a Personal Responsibility Agreement and to call her landlord so that the worker could verify that her son did in fact live with her. She was directed to get her child's immunization records, to apply for unemployment insurance, to obtain bank statements, to bring in utility bills, to attend a parenting class and a work orientation session, and to have her husband document his self-employment expenses and get a letter of termination from his last employer. But in the end, she could not pursue her application for cash assistance because she could not produce her birth certificate. She settled for opening a food stamp application (for which she did not need the birth certificate) and left the office--late for a scheduled job interview.

Throughout the more than two-hour encounter, she was told to do many things. She signed many forms. But she was not told about the availability of assistance to help her make ends meet once she returned to work. She was never told that she would probably be eligible for low-income Medicaid even if she found a job (even though she complained that her last job "didn't provide medical"). She was never told that she might qualify for child care benefits (even though her son was not yet in school). She was not counseled about the Earned Income Tax Credit (EITC) or about employment or training services. If she was lucky enough to get the job she interviewed for that afternoon, she was likely to earn too much to keep her food stamps and unlikely to connect with any assistance that would help her support her family on low wages.

In many if not most states, the administrative structure and capacity of the welfare system are still similarly at odds with the job of helping low-income individuals obtain supportive services. Even when they have the potential "customer" in hand, front-line welfare workers are often too busy or too preoccupied with eligibility concerns to do much in the way of counseling applicants.

Helping clients keep benefits. In many programs, it is nearly as hard to retain benefits as to obtain them. In studying the duration of child care assistance in a number of states, for example, we have found that children generally receive subsidies for only a few months. The reasons they leave the system are likely to be varied--parents may lose their jobs, change their schedules, lose their child care providers, or decide to go without assistance. But the complexity of keeping a child care subsidy appears to contribute to these exits as well. As in other areas of assistance to the working poor, welfare systems turn out to be better equipped to avoid processing errors that cost the state money than they are to help working families meet their needs.

Consider the system in one northeastern state. As a parent moves into, through, and out of the welfare system, she will probably interact with three separate agencies in order to qualify for child care assistance: a workfare agency (when she is receiving TANF and participating in a mandatory work experience activity), a welfare office (when she has earnings but is still receiving TANF), and a transitional services office (when she earns enough to become ineligible for TANF). In each system, she is required to make an initial application in person and to recertify her eligibility in person every six months. Each month she receives child care assistance, she will need to have the child care provider fill out a voucher certifying services and send the voucher to the relevant welfare agency; she will also need to comply with whatever the welfare system requires of her (for example, showing up for her work experience activity) and submit pay stubs documenting her earnings. If her paperwork is all in order, the welfare agency will then issue her a check to pay the child care provider.

This is the routine if all goes well. But it is easy for things to go badly. Her child care payment may be delayed by agency paperwork problems. Her child care will be closed if she is determined to be noncompliant with some aspect of the welfare program and is sanctioned. Her case may close, even if she is compliant, if her welfare status changes, if the paperwork goes awry during the transition from one child care system to the next, or if the agency makes a coding error.

Given the complexity of the administrative and information management systems involved, it is not surprising that these errors are common. What should be surprising, and disturbing, is the extent to which the cost of the errors falls on the parent rather than the state. The child care subsidy system in many counties is biased in the direction of saving the state money. When the eligibility status of a child care case is in doubt, the usual system response is to avoid a potential overpayment by withholding benefits. For the welfare administrator who has to balance the books, this approach is fiscally sound. But for the working parent who has already incurred a child care bill, or the caregiver who has already provided services, this approach may be financially disastrous.

When lawmakers in Congress and state legislatures set out to "reform" welfare, they started with the obvious targets. They restricted access to welfare and liberalized spending for supportive services designed to serve as a transition from welfare reliance to welfare independence. The reform was incomplete, however, because they left the delivery of these support services to a welfare system that has neither the incentives nor the organizational capacity to advertise and deliver them. As a result, many working families are not getting the help they need to achieve self-sufficiency on low wages. This is not inconsistent with the reluctance of many elected officials to spend money on the poor. But it is also not inevitable. Rather, it means that lawmakers committed to real reform of the system will need to consider changes not only in the rules and regulations, but in the delivery system as well. Fortunately, there are examples, in the United States and abroad, of alternative approaches.

In terms of getting the word out, there is good reason to believe that, with the proper incentives and resources, public agencies can do effective outreach and case-finding. One of the most impressive recent examples is the children's Supplemental Security Income (SSI) program. In a 1990 ruling in Sullivan v. Zebley, the Supreme Court liberalized the criteria used for determining children's eligibility for disability benefits. In order to apply the new rules fairly, the Social Security Administration directed its regional field offices to conduct outreach in order to identify newly eligible children and those who were denied benefits under the earlier rules. Importantly, this directive was funded. The SSI program was also an uncapped entitlement for qualifying children, and finding cases had financial benefits for state and local welfare agencies (because shifting poor children from welfare to the fully federal SSI program saved state and local governments matching funds). Within a few years, many local welfare agencies had staff specifically assigned to the task of finding potentially eligible children and helping them qualify for benefits. The results were impressive. In the four years following the Zebley ruling, with aggressive outreach by Social Security and welfare offices, the number of child cases in the SSI program tripled. (The increase was so dramatic, in fact, that children's SSI benefits were later targeted for cutbacks in the 1996 welfare reform bill.)

Getting the word out about supportive benefits is an important first step. But it is only the first step. If lawmakers want working poor families, who are often as short of time as they are of money, to access these benefits, they will also need to make the delivery system more "user friendly."

Some state and local welfare systems have taken steps in this direction. One approach has been to consolidate welfare, child care, and employment services and expand the authority and skills of front-line workers. States are experimenting with "seamless" systems of child care funding to minimize the difficulty of retaining benefits over time. Others are developing new approaches to inform parents about child health insurance benefits--from hotlines to community-based intake systems.

Many states and localities are moving some portion of support services out of the welfare system and into alternative government agencies or community-based organizations. This decentralization and privatization of services may help working families access assistance by separating it from the restrictive and hostile systems that dominate welfare offices.

Decentralization and privatization may have several advantages, but they may also have important limitations. Decentralization can backfire if it creates more complex and fragmented systems that increase transaction costs for potential applicants. Private agencies, no matter how user-friendly, are also constrained by the funding and rules of the programs they deliver. Many private Child Care Resource and Referral programs, for example, report that they would like to expand their scope of service, but they are implicitly or explicitly discouraged from doing so due to shortages of child care funding. Finally, the private sector has plenty of its own "bad seeds"--agencies that abuse government funds and even clients. Given the inherent difficulty of monitoring the activities of nongovernmental organizations, a cautious approach to widespread privatization may be warranted.

A more fruitful approach may be to consider the public systems that work well for the delivery of other forms of government assistance. The tax system, for example, now delivers cash assistance through the Earned Income Tax Credit to millions of low-income families, though these benefits are still provided in a single lump sum at tax time, which does little to help struggling families meet their ongoing work and other expenses. Social Security provides an even more encouraging example. Because the emphasis is on getting benefits out rather than keeping applicants out, the Social Security Administration operates with exemplary efficiency to provide assistance to millions of recipients and spends only an estimated 1 percent of its funds on administration.

To find other models for delivery of government services, it helps to look farther afield and consider models developed in the industrialized countries of Western Europe. Cash assistance for families is well established in most of these countries, in the form of child allowances (which may be means-tested or taxable in order to target benefits on lower-income families). An even more encouraging example can be found in the delivery of child care services. In most of these countries, more than 80 percent of children attend publicly supported child care by their third birthday, and nearly all low-income working parents have access to public child care when their children are even younger. These services have grown substantially over the past two decades, easily weathering recent, much heralded retrenchments in several of the European welfare-states. Widespread support for such services suggests that an active government role in providing assistance to working families is both politically and operationally feasible, given the right administrative structures.

In the United States, many disadvantaged parents are keeping their side of the welfare bargain, especially single mothers, who constitute the large majority of welfare recipients. Whether they have been pushed by more demanding welfare rules or pulled by a tight labor market, the number of single mothers receiving welfare has plummeted since 1996 while the number employed has increased at a remarkable rate.

On one level, government appears to have kept its side of the bargain as well. Congress expanded the EITC in the early 1990s and raised the minimum wage in 1996. Federal and state governments are also spending more on child care assistance. Congress has authorized new federal funds with a more generous matching rate to encourage states to expand health coverage for poor children. Considered together, these policies form a reasonably generous alternative safety net for working but low-earning families. The Council of Economic Advisers says that, with the EITC, a parent with two children who works full time for the minimum wage can now have income above the poverty line. If she and her children are covered by government health insurance, and if she has subsidies to cover her child care expenses, she has a reasonable chance to achieve self-sufficiency.

However, the operative word in this optimistic scenario is "if." Families can hope to achieve self-sufficiency on low wages if they receive the extra income from the EITC and food stamps, if they have health insurance, and if they receive child care subsidies. To date, the evidence suggests that far too many working but poor families are not receiving this package of assistance: Food stamp case loads are declining at an unprecedented rate, and, according to researchers at the Urban Institute, about two-thirds of families leaving food stamps appear to be still poor enough to qualify for assistance. Analysts at the Urban Institute have also found that as many as three-quarters of low-income children without health insurance seem to live in families whose income is low enough to have qualified them for it. And despite substantial new child care spending, only 10 to 14 percent of eligible families appear to be served by the major federal child care program, the Child Care and Development Block Grant.

Much of the problem appears to lie not in legislative policy, but in the structure and operation of state and local welfare systems that control outreach and intake for these programs. Given the historical role of the welfare system, this is not very surprising. Systems that work well to keep people out of welfare work poorly to get people into food stamps, health insurance, and child care services.

As we move from narrowly targeted, tightly rationed "welfare" to more universal and readily accessible forms of assistance, a change in delivery systems is critical. This may represent an even more radical reform of the welfare system than that envisioned by Congress in 1996. But as the perennial question of "what to do about welfare" shifts from the problem of welfare reliance to the problem of continued economic insecurity for low earners, an equally radical shift in the answer is needed. ¤